Dealing with Debt: Debt levels for Canadian Seniors Growing

Over the last few years, economists have been alarmed at the growing rate of debt among Canadian seniors.

More and more people are hitting 65-years of age and still carrying a mortgage or car loan, which is inhibiting them from enjoying their lives.

What the Statistics Say

A Financial Post survey found that 11.3 million Canadians over the age of 55 had debt. They reported that 1.87 million were paying off a mortgage, which was up 20 per cent from two years earlier.

Furthermore, a TD Bank study found that the number of older Canadians filing for bankruptcy or consumer proposals was also on the rise. In 2010 16 per cent of Canadian seniors had filed, that was up from 12.5 per cent just two years earlier.

A recent report by HomEquity Bank found that 77 per cent of Canadians over 65 years are reliant on their pension as a primary source of income. Only 57 per cent have RRSP to live on and 48 per cent have savings set aside.

They also discovered:

  • 15 per cent of Canadian seniors have a mortgage
  • 17 have car loans
  • 30 per cent of seniors have lines of credit
  • 10 per cent have a home equity line of credit
  • 90 per cent have credit cards, which has a balance of over $2,000

According to the study, the average Canadian senior has a debt load of $29,973, which includes mortgage debt.

 

Why Seniors are taking on more debt

Part of the problem, according to the Financial Post was that many seniors were accepting more debt in order to help their adult children do things like buy a home. However, some seniors were found to have taken out loans and lines of credits to fund vacations or other lifestyle expenses.

As well, the daily costs of living have been increasing. The price of food has gone up and the cost of housing and taxes have also gone up across the country. Add on to that medical bills, increasing utility bills, and other necessities like petrol or transportation costs.

 

Tips to Tackle Your Debt

Even if you have a mortgage or other debt into your golden years, there are steps you can take to minimize its impact on your life.

These include:

  1. Have a repayment plan and budget for it. There are two tactics you can take:
    a) Make the biggest payments on the debt with the highest interest rate. Get this one off your plate quickly and avoid paying too much in interest.
    b) Pay off the smallest debt first then use that money to tackle the next debt and so on.
  2. Talk to a financial planner and look at your options. Some seniors may find consolidating the loans to be helpful.
  3. You could also seek out assistance from a credit counselling agency. There are many across the country that offer free advice.
  4. It may be time to consider downsizing or selling what you don’t need. You can use the money you earn to pay off your debt.
  5. While not ideal, some seniors who find themselves drowning in debt may need to increase their income by taking on a part-time job.

 

Conclusion

Despite the fact that debt has been growing among Canadian seniors, by putting a plan into place, living within your means and making smart financial choices you can prevent it from hindering your retirement.

 

Written by Chandra Lye

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